I think the big difference between now and 1929 is the federal government was not using the Federal Reserve as a printing press (quantitative easing). For sure, the government WAS spending money it didn’t have - roads, bridges, public works - tangible infrastructure and jobs ala the likes of CCC and WPA. Just not injecting it into the banks and brokers’ pockets like QE.
To me, there is a big disconnect between jobs, production, prices, nearly every indicator that affects me personally (not the government’s concoction of what prices are doing). Anything bad happens, the market may hiccup for a minute or two, or just keep humming - odd, really.
The stock market seems oblivious to nearly any commonly felt indicator. They have seemed perfectly happy to have that 6 years of nearly $1trillion/year QE for mortgage backed securities and the Fed’s purchase of T-Bills (which ‘legitimizes’ the increasing debt it is incurring for us.)
I think the whole thing stinks myself. And, I don’t think it will come crashing down until the QE is stopped (for one reason or another). At that point, all the worthless debt that’s been shuffled off to bad deals, derivatives, payments for debt will come home to roost.
You have to look at the stock market as the performance of companies, not people. The best way a company can drive up its stock price is laying off American workers.
“For sure, the government WAS spending money it didn’t have - roads, bridges, public works - tangible infrastructure and jobs ala the likes of CCC and WPA. Just not injecting it into the banks and brokers’ pockets like QE.”
People would probably be surprised at how little the government was spending then compared to what we now think of as ‘normal’. In the years after WWII the government has typically spent around 18% of the GNP. Obama’s socialism-lite is spending around 24%. Dubya’s last year was also 24%.
In the years before the Depression the government was spending maybe 8% of the GNP. Sometimes 6%. During the Depression gov’t spending ‘spiked’ up to 12%. When we entered WWII spending really did soar, to nearly 45% of GNP, but it fell to below 20% when the war ended.
“The stock market seems oblivious to nearly any commonly felt indicator.”
What’s driving it are extremely low interest rates and the Fed providing plenty of money to the much larger bond market. When they finally turn off that spigot and interest rates begin to climb the party should be over.